International Trade

Total U.S. exports for 2015 are $1.5 trillion. Automotive products represent 9.15% of that total, or more than $137 billion in 2015. Automakers and suppliers are America’s largest exporters, beating the next best performing manufacturing sector by more than $1125 billion over the past 6 years. In 2015 alone, FCA US, Ford and General Motors exported more than 1 million American-made vehicles to more than 100 different foreign markets.

 

Top Five U.S. Exporters (2015, in billions)


 

As America’s largest exporters, FCA US, Ford and General Motors have supported every U.S. free trade agreement ratified. These agreements have reduced tariffs and eliminated numerous non-tariff trade barriers in key markets. The Trans-Pacific Partnership (TPP) could generate similar benefits for U.S. exporters, but only if key issues are addressed:

  • Eliminate all auto non-tariff barriers in all TPP-member countries.
  • Include strong, enforceable currency manipulation disciplines (This is vital, due to Japan’s participation in the TPP).

Currency Manipulation by Japan undermines global competition in three ways:

  1. Makes it harder to export American vehicles to Japan;
  2. Provides Japanese automakers with an unfair competitive advantage in the United States; and,
  3. Makes it harder for American companies to compete with Japanese automobiles in other markets, like South America, China, Europe and the Middle East.

AAPC developed a proposal supported by leading non-partisan trade experts that is based on International Monetary Fund commitments already agreed to by all TPP member countries. It asks three simple questions to determine if a TPP member manipulates its currency:

  1. Did the TPP member have a current account surplus over the six-month period in question?
  2. Did it add to its foreign exchange reserves over that same six-month period?
  3. Are its foreign exchange reserves more than sufficient (i.e., greater than three months normal imports)?

If a TPP member is found to have breached its currency commitments under the agreement, the other TPP members shall be entitled to suspend the tariff benefits of the agreement with respect to the violating TPP member.

In an industry where automakers earn about $1,500 on a typical vehicle, Japan’s undervalued currency represents thousands of dollars per vehicle.

Weak Yen Subsidy Per Car in U.S.


Based on the October 1, 2012 rate of 78 yen/$, when Abenomics started.
3-4% profit margin on sedan. Source: McKinsey & Company, 2003 Preface to the Auto Sector Cases

 

  • Feb 12 2014

    Cadillac sets ambitious sales goals for 2014

    Written by Melissa Burden | Posted on The Detroit News

    Cadillac hopes to grow by double-digit percentages this year globally and in the U.S. as it expands its footprint in China and adds new models to its American lineup.

    General Motors Co.’s luxury brand sold nearly 251,000 vehicles last year as global sales jumped 28 percent and U.S. sales rose just shy of 22 percent.

    Cadillac will launch three new or refreshed models in the U.S. this year: The 2014 ELR plug-in hybrid coupe is just getting into showrooms. The 2015 Escalade SUV will arrive in dealerships this spring. And the 2015 ATS Coupe arrives at dealerships this summer.

  • Feb 07 2014

    Ford to Oppose Trans-Pacific Trade Pact Without Currency Limits

    Written by Mark Clothier | Posted on Bloomberg Businessweek

    Ford Motor Co. (F:US) said it will oppose the Trans-Pacific Partnership if the trade agreement doesn’t limit a country’s ability to manipulate its currency.

    The proposed pact “is not likely to generate any net benefits for American manufacturers if it does not address the critical issue of currency manipulation,” Joe Hinrichs, Ford’s president of the Americas, said in a Feb. 6 speech at the Chicago Auto Show.

  • Feb 07 2014

    Ford steps up pressure over TPP

    | Posted on Financial Times

    America's car industry has plenty to thank President Barack Obama for, but it's still unhappy with a flagship trade deal that the White House is negotiating.

    The carmakers want the Trans-Pacific Partnership (TPP), a free trade agreement with 11 Pacific nations, to include provisions to stem what they claim is the deliberate weakening of the yen by the Japanese government, something they argue hands an unfair advantage to Japan's car manufacturers, writes the FT's Aaron Stanley.

  • Feb 03 2014

    Trade agreement must protect against currency manipulation

    Written by Matt Blunt | Posted on St. Louis Today

    In the column “Carmakers’ currency stance imperils trade talks" (Jan. 26), David Nicklaus incorrectly implies that American automakers are pursuing currency provisions in order to delay the agreement or kill the negotiations altogether. In fact, U.S. automakers have supported every ratified free trade agreement and consistently lauded the economic potential of the Trans-Pacific Partnership.

  • Jan 28 2014

    DOUBLE-DIGIT GROWTH STRENGTHENS FORD FOCUS’ LEAD AS BEST-SELLING VEHICLE NAMEPLATE IN THE WORLD

    Written by Ford Media | Posted on Ford News
    • Ford Focus global registrations grew more than 16 percent year-over-year, widening its lead over its next competitor by more than 75,000, based on Ford’s analysis of the just-released and latest Polk global vehicle data for January to September 2013
    • Propelled by Ford’s growth in China, Focus registrations surpassed 303,000 units there to also make it the best-selling passenger car nameplate in China
    • Focus is driving Ford’s global growth and is joined by Fiesta to give Ford two of the top five best-selling nameplates in the world

    The Ford Focus continues to b

    Filed Under: Export, International Trade